Avantax shareholders overwhelmingly accredited the merger between the tax-focused wealth administration agency and Cetera Holdings at a particular shareholder assembly Tuesday, in response to SEC filings.
Avantax introduced the settlement to promote to Cetera in an all-cash $1.2 billion deal September, with shareholders cashed out at $26 per share. The transfer would take Avantax personal and delist it from Nasdaq, with the remnants of the agency working as a separate division inside Cetera.
Along with voting to approve the merger, shareholders additionally agreed by a large margin that compensation “could also be paid or grow to be payable to (Avantax’s) named government officers that’s based mostly on, or in any other case pertains to, the merger.”
Earlier SEC filings indicated Avantax CEO Chris Walters, CFO and Treasurer Marc Mehlman and Chief Authorized Officer and Company Secretary Tabitha Bailey all deliberate to step down after the deal closed. Different filings indicated Walters might obtain a “golden parachute” of as much as $21.5 million with the finalization of the deal.
Earlier this yr, Avantax modified its title from Blucora and offered its tax software program enterprise, but it surely confronted elevated calls from activist buyers to think about promoting the corporate (together with from Engine Capital, which owned about 2% of Avantax shares).
Engine urged Avantax to think about a sale due to its holding firm construction, aggressive positioning shortfalls and that enhancements in recruitment and advisor satisfaction made a sale extra engaging to consumers. Bloomberg first reported on the potential of a sale in July.
Avantax sprang from combining tax-focused dealer/sellers HD Vest and 1st World in 2019, resulting in a agency with 4,200 advisors and $67 billion in shopper property; by 2023, Avantax’s advisor depend shrunk to three,078 although its shopper asset complete grew to $84 billion, greater than half of which had been underneath administration.
In October, Avantax additionally revealed through SEC filings that it confronted a number of lawsuits from shareholders claiming the Cetera deal might shortchange shareholders and that the proxy assertion touting the deal omitted materials data.
The plaintiffs demanded the Cetera deal be placed on maintain till the disclosures had been made, together with data on managements’ conflicts of curiosity, post-employment agreements and a few monetary projections for Avantax.
Avantax denied that the extra disclosures had been legally required, however filed an amended regulatory assertion with the data, “with a purpose to moot the unmeritorious disclosure claims, alleviate the prices, dangers and uncertainties inherent in litigation and supply extra data to its stockholders.”
Neither Cetera nor Avantax returned requests for remark as of press time.
Avantax administration has waged quite a few fights towards activist buyers over time. In 2021, Ancora, an RIA acquired by Focus Monetary Companions, waged a proxy battle towards Blucora, arguing administration failed to search out synergies between Blucora’s roll-up of tax-focused b/ds, and its legacy skilled tax software program, main the inventory worth to dip (shareholders voted to retain the board members).
Later that yr, Ancora additionally pressured the board of administrators to promote its on-line tax prep unit, which it will definitely did in November 2022. In February 2022, Engine Capital additionally pressured Blucora to realize three seats on the board.
